Cryptocurrencies

Tornado Cash experiences $1.9 billion resurgence in 2024

Article Image

Banned crypto mixer Tornado Cash (CRYPTO:TORN) has seen a significant uptick in deposit volumes in the first half of 2024, with $1.9 billion in new deposits, marking a 50% increase from the total deposits in 2023.

This resurgence comes despite the ongoing sanctions and legal troubles for its founding team.

The Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash in August 2022, after discovering that the North Korean hacking group Lazarus used the protocol to launder approximately $455 million in illicit funds.

The OFAC sanctions impose a blacklist on anyone interacting with the protocol, effectively barring their wallets from being accepted at legally compliant crypto exchanges.

Despite these restrictions, Tornado Cash continues to attract large hacking groups seeking to obscure the flow of stolen funds.

According to Arkham Intelligence, the hacker behind the $100 million Poloniex exchange exploit transferred $76 million to the mixer since May, and the entities behind the HECO Bridge and Orbit Chain exploits moved $166 million and $48 million, respectively.

Recently, one of the wallet addresses used in the $235 million hack of Indian crypto exchange WazirX on July 18 was funded via a Tornado Cash deposit.

Ether remains the most popular crypto asset on the mixing protocol.

The sanctions against Tornado Cash have been legally challenged in an ongoing lawsuit, first filed in 2022.

Plaintiffs argue that sanctioning Tornado Cash is unlawful and unconstitutional, claiming it violates the right to free speech under the US Constitution.

Several crypto industry figures and advocacy groups, including Coinbase, The Blockchain Association, and Coin Center, have supported the lawsuit, arguing that the sanctions are unlawful.

However, the US Treasury maintains that crypto mixers like Tornado Cash pose a national security threat and that the protocol repeatedly failed to implement controls to prevent money laundering.

Meanwhile, Tornado Cash's three co-founders face significant legal challenges.

Alexey Pertsev was sentenced to over five years in Dutch prison on money laundering charges in 2023.

Roman Storm, arrested in the US in August on similar charges, pleaded not guilty and was released on a $2 million bond.

He has since filed a motion to dismiss all charges.

The legal and regulatory landscape surrounding Tornado Cash remains contentious as the industry grapples with balancing innovation and regulatory compliance.

Disclaimer
Grafa is not a financial advisor. You should seek independent, legal, financial, taxation or other advice that relates to your unique circumstances. Grafa is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on the information provided directly or indirectly by use of this platform.
Publisher
Grafa